Microsoft and Xbox 360 fans have been bragging with the better game line-up, lower price and that the Blu-ray would be a mistake by Sony for the PlayStation 3. Now that Microsoft has more or less lost the edge on these areas, and Blu-ray is proving to be a valuable addition, they once again go for their war fund. While Sony is mostly operating on the consumer electronics market, Microsoft gains huge revenue streams by selling air, namely Windows licenses, for the PC vendors. They have all the money in the world, and while they have done multi billion losses with the Xbox, they are not afraid to do some more damage for their bank balance in hopes of gaining market share on the console market.

The announced price reductions are significant. The 20GB model prices is slashed down by another €80 and the low-end non-hard drive model is reduced by £40 in the UK market. The console market has often been noted as being a very price sensitive business. It remains to be seen how the consumers respond to these changes. Sony has better overall offering with PlayStation 3 at a higher price point, while Xbox with the new prices goes moves closer to the Wii price range. It is speculated that Sony would not respond to the price reductions, at least not immediately. Their focus seems to be on delivering more value with interesting game bundles, like the GT5 Prologue.

In terms of technology, the offering of Blu-ray is simply better. Most importantly it offers more capacity than HD DVD, which will come to good use with the 1080p full HD resolution material. If you look at the corporations behind these two formats, you’ll notice that support for Blu-ray was significantly stronger on the manufacturer side. Sony, Pioneer, Philips, Samsung, Panasonic (Matsushita), Hitatchi, Thomson, DELL, Hewlett-Packard, Mitsubishi, Apple…Toshiba and HD DVD didn’t have much chance.

Game consoles are another interesting story. Sony’s PlayStation 3 shipped with Blu-ray drive integrated, while Microsoft decided to launch Xbox 360 early with previous generation DVD technology. Microsoft did support HD DVD to some extent and produced the HD DVD expansion drive for the 360, but that was more of a bluff and response to PS3 rather than real commitment for the HD DVD format. Microsoft’s high definition strategy is quite possibly a download service based solution, rather than physical media.

So actually when you consider the facts, war is an overstatement. Toshiba and HD DVD tried to challenge, but it was more like a David vs. Goliath deathmatch and as we know the latter wins nine out of ten times. And the media always loves the David. For the last couple of years we have been forced to read all kinds of crap about BetaMax vs VHS, or how PS3 will fail and kill Blu-ray in the process. Overall it became fashionable to bash Sony, PlayStation 3 and Blu-ray. But now, with the announcements from the recent CES expo, we can finally conclude that this battle is over.

Actually a dead cheap HD DVD player (the prices seem to be sinking towards US$100) with an interesting movie bundle might still be a good buy – you would get a nice DVD player with up-scaling features, some bundled movies, and perhaps you can buy a few more HD DVD titles cheap in the near future. And as a result you will have a piece consumer electronics history in your collection. Wait a few years and it’s vintage – kinda like owning a Laser Disc player!

But as the saying goes, the battle may be over but the war ain’t for Blu-ray. The real challenge is to convince the market and the vendors that a 12cm diameter plastic disc is still the way to go. After all the physical format of the disc is decades old, and not too practical. It is rather large and easily scratched and damaged. Will download services or solid state technology be ready in time compete with Blu-ray as the first generation high definition consumer format?